Exercise 20-5 Your answer is partially correct. Try again. Pottery Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 70% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 30,000 curtain rods per year A supplier offers to make a pair of finials at a price of $12.95 per unit. If Pottery Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $45,000 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other Prepare an incremental analysis to decide if Pottery Ranch should buy the finials. (Round answers to 0 decimal places, e.g. 1250. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Make Buy Increase (Decrease) Direct materials 108204 108204 Direct labor 132912 132912 Variable overhead costs 87722 87722 Fixed manufacturing costs 45900 45900 Purchase price 379140 379140 Total annual cost 374738s 425040 50302 Should Pottery Ranch buy the finials? not buythe finials. Pottery Ranch should Would your answer be different in (b) if the productive capacity released by not making the finials could be used to produce income of $20,000? increaseby 7100 Yes income would Click if you would like to Show Work for this question: how